New Delhi: Given the worries plaguing the global economy, India will ensure that fundamentals at its own end remain strong to attract capital with resolution soon on all tax disputes, and framing of a new bankruptcy code and an updated procurement law, Finance Minister Arun Jaitley said on Thursday.
“In such a situation where there is turmoil almost by the day in global markets, we are trying to make the fundamentals of our own economy strong, and our ability to resist these changes can substantially improve,” Jaitley said, ahead of the monetary policy update in the US.
“Without investment, there is going to be no additional economic activity,” he said at the India Economic Convention, organised here by the Federation of Indian Chambers of Commerce and Industry (Ficci) and attended by ministers, the who’s who of India Inc. and key policymakers.
The finance minister’s remarks came just ahead of the meeting of the Federal Open Market Committee, an arm of the US central bank, set to review later Thursday the country’s interest rate regime, which the global financial markets, including India, have been watching very keenly.
The fear is that if there is a hike in interest rates — for the first time since 2006 — there could be a flight of capital away from emerging market economies such as India towards the US, since investments there would become more attractive.
Jaitley said that with the stated objective on ease of doing business, all tax disputes will be put to rest over the next few days, and added that this was a “work in progress” along with steps to make it easier to do business in India.
“Since May 2014, a number of tax disputes have been put to rest since the Bharatiya Janata Party government took office,” the finance minister said alluding to the issue of retrospective tax on capital gains which has been much criticised, notably by overseas investors and funds.
“We are trying over the next few days itself (to look at pending disputes) so that many others can be put to sleep — either by a judicial resolution or some executive resolution.”
Speaking about economic reforms, Jaitley said that while the goods and services tax regime was stuck because of political reasons, the government was taking other steps, like putting in place a new bankruptcy code, fast-track arbitration norms, and a revamped public procurement law.
This apart, hiring norms for banks were being recast and their balance sheets recapitalised to make them financially stronger. The stressed assets of companies in infrastructure, steel and power distribution were also being dealt with.
These steps, he said, were key to fetching investment.
“Any architecture of Indian growth — along with private investment, public investment when it picks up, and foreign direct investment — will need a lot of resource diversion to skill India and make these people in unorganised sector also to start generating jobs,” he said.
“Kick-starting our manufacturing sector and improving its growth rate further, I think, is one of the greatest challenges to the Indian economy. We have now decided that within the area of growth architecture, we must first concentrate on agriculture.”